Secret shoppers from the Automobile Protection Association visited 16 car dealerships in Greater Vancouver to shop for new vehicles. Visits took place in early 2018 and were recorded on W5’s hidden cameras. The W5 report on the investigation airs on Saturday April 14, 2018 and is available online. Overall, just three (about 20%) of the 16 dealerships visited earned a Pass rating. The remaining 13 dealerships failed for a variety of reasons.

Bait and switch

Four out of 13 dealers failed because they were unable to offer even one example of the base model advertised on their own, or their manufacturer’s websites. Neither of the two Honda dealers visited had a basic Fit DX advertised by Honda Canada for $15,190 plus freight and PDI. At Carter Honda, the seller said the last person to order a Fit DX like the one on the dealer's website had to place a factory order and wait six months. The sales manager at Vancouver Honda said, “You should've ordered in November,” for delivery of a vehicle in February. The APA has encountered this kind of bait and switch advertising for the Honda Fit in dealer investigations in Vancouver, Calgary and Toronto since 2014. “The Fit is an excellent $20,000 car,” said APA’s Director, George Iny, “but Honda advertises it for $3,500 less. That price is mostly an illusion.”

Neither of the two Toyota dealers had a base Corolla CE available at the Toyota Canada price of $ $16,790. Regency Toyota said “A factory order would take three months.”

One of the two VW dealers visited had a base Golf 3-door; that’s VW’s entry-level model this year, and it’s heavily promoted at a $19,995 price point. However, the APA shopper was disappointed to learn that Regency VW was double billing for vehicle preparation, adding a charge of $384 on top of the factory’s freight and PDI charge, and applied a high dealer overhead charge, called a DOC fee, that increased the advertised price by total of $1,093. A second VW dealer didn’t have any 2018 base Golfs.

Unfortunately, deceptive advertising by the carmakers is outside the authority of regulators responsible for dealer advertising in British Columbia, Alberta, Manitoba, and Ontario, unless a dealer uses the same bait and switch promotion as their manufacturer. Enforcement of rules on bait and switch advertising at the car manufacturer level would most efficiently be handled under federal jurisdiction, to avoid the provinces playing “whack a mole” with individual dealerships. That authority lies with the federal Competition Bureau.

Extra charges

Four dealerships offered all-in price advertising in which the advertised price included all charges except taxes. When shopping at those dealerships, a final price that looks the same as a competitor’s will actually be hundreds of dollars cheaper because there are no additional charges. Those dealers are identified in the chart below.

Vancouver dealers add lots of extra charges for bogus services like filling out paperwork and fake "Green" charges, made to look like payments to an environmental authority. Some charges appear in the fine print of dealer advertising while others materialised seemingly out of thin air at the dealerships. Listing extra charges separately in small print appears to comply with the loose requirement on price representations in B.C., but the APA believes the amounts far exceed the dollar value of the services provided. Kia Vancouver had the highest total for extra charges at $2,693, followed by Kia Richmond at $1,685.

Among the more creative charges the APA discovered in Vancouver not included in advertised prices:

a “brokerage fee” of $795 at Kia Richmond,

a combined DOC and finance contract charge of $1,093 at Regency Volkswagen

Five provinces require dealerships to advertise an all-in price, but among those, only Quebec also extends the requirement to manufacturer advertising. No province appears to be challenging the dubious nature of the “services” being charged for; the APA believes they are either vastly overpriced (like $549 to fill out a bill of sale) or phony (Green “levies” that aren’t forwarded to any environmental authority). BC’s Vehicle Sales Authority needs to police extra charges by dealerships diligently, or the current situation will become even more out of hand.

Deceptive ad offers

Key West Ford's ad promised a $1,000 discount to Costco members and three months of no charge payments. Neither was available on the advertised Focus shopped by the APA. The manager stated the offers applied to the Ford Fusion, a larger car that was not even featured in the ad.

Kia Richmond and Kia Vancouver ran separate ads for a Kia Soul LX on promotion. By checking the stock number of the vehicles, the shopper discovered the two dealers were sharing just one Soul – but their ads didn’t say that. The advertised $5,500 discount was calculated from a phony retail price, two thousand dollars higher than the actual Manufacturer’s Suggested Retail Price.

Morrey Nissan’s promotion for a base Rogue S included a heated steering wheel and remote starter in a list with other standard features. It turns out neither feature is available on the Rogue S, even as optional equipment at extra cost. The seller explained that the ad didn’t use the word “standard” in front of those two features, so that could mean they’re optional or not available!

Cash back

Two dealerships advertised Cash Back up to $10,000 in their advertising. The seller at Kia West explained that far from being a discount, this would be fronting a loan to yourself (Cash Front), that would be added to the price of the car. The seller explained that you could use the money to pay down debt running at higher interest rates (like Christmas-related credit card debt). Of course, there are no savings when the price of a vehicle is boosted by the same amount as the cash returned to the customer, and the seller did not explain that the buyer would be paying 12% sales tax on this disguised loan to him or herself. To APA’s knowledge the deception around paying sales tax on a loan wrongly described as cash back has not been challenged by regulators.

The APA believes the banks that accept the sort of paperwork involved in a phony cash back offer hold the key to curbing the practice. From a personal finance perspective, financing a new vehicle to help pay down other debt obligations you're having difficulty meeting is a bad idea.

Warranty Misrepresentations

Half the dealers surveyed misrepresented the manufacturer warranty for rustproofing. In many cases this was a prelude to upselling expensive extra-cost coverage applied at the dealership. If a salesperson tells you there’s no corrosion warranty on a new vehicle, they’re lying. All carmakers offer corrosion warranties from three to 12 years, depending on the brand.

What needs to happen

British Columbia’s Vehicle Sales Authority should clamp down on dealerships that add extra charges. Perhaps the VSA could survey dealers to determine which ones offer a true all-in price and make that information public. At this time, a true all-in price dealer in Greater Vancouver is at a significant disadvantage.

Dealer regulators in five provinces have their hands tied when it comes to deceptive advertising and vehicle representations involving the automakers. It’s time the loopholes that allow automakers to flout the rules applicable to dealer advertising in British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario were closed.

The root of the problems that contribute to bait and switch advertising and extra charges lies with the automakers. They design promotions with unrealistic promises and almost no margin for the dealers, and then compel their dealers to run the same promotions. When it comes to the carmakers, the federal Competition Bureau has the authority to enforce robust standards for car advertising, but is currently inactive. The Competition Bureau should place a higher priority on enforcement of deceptive practices related to the retailing of new vehicles.

What you can do

In British Columbia, look for dealerships that advertise an “all-in” price. It’s not a guarantee that you won’t encounter deceptive practices, but you’ll improve the odds of matching the advertised offer.

Keep a copy of the dealer’s ad for the vehicle handy when you are shopping, so you can double check the vehicle and price representations more readily.
Write the dealer regulator in your province if you encounter a bait and switch ad or discover extra charges not listed in dealer advertising. Be sure to provide any written evidence you have (advertising, printouts from the dealership, business cards) and the date when you shopped.

If you discover automaker advertising that is deceptive, complain to the federal Competition Bureau. To a certain degree it’s a “numbers game” at the Bureau; if enough shoppers complain, we may be able to overcome the Bureau’s inertia around deceptive retailing practices by automakers.

Extra Charges added by Vancouver dealers in 2018

Below you’ll find a summary of the various charges the APA secret shoppers encountered during their survey in Vancouver. Previous APA surveys uncovered many of the same extra charges at dealerships in other provinces. The charges must be included in the advertised price for the vehicle in the provinces of Alberta, Saskatchewan, Manitoba, Ontario and Quebec. A sixth, British Columbia, doesn’t require an all-in price, but the additional charges must be itemized in advertising.

DOC charge $325 to $1,093
A general charge for dealer overhead, this is the one most likely appear during negotiations. Sellers usually said the charge covered the cost of paperwork, but the relationship between filling out a bill of sale or a car loan application and the actual amount charged is whimsical. Filling out paperwork should be included in the advertised price of the vehicle. At $1,093, Regency Volkswagen had highest charge, made of a combined DOC charge and a second charge to write up the financing contract.

Preparation, Convenience and Preparation $380-$397
A couple of dealers double charged for vehicle preparation, adding their own charge on top of the one set by their manufacturer for freight and the pre-delivery inspection. Regulators should prohibit this practice.

Go Green tire levy, Security Registration, 1st Year Protection $395 to $549
The tire levy in British Columbia is $5 per tire. Dealers bundled this charge with overpriced road hazard insurance, nitrogen (worth $5 a tire) and sometimes wheel locks (they were unnecessary for the steel wheels on the basic models shopped by the APA). Cost to the dealer: about $60 for the basic vehicles shopped by the APA; up to $125 for large tire sizes.

Brokerage Fee $795, ADM $1,599
The Brokerage Fee was a money grab at Kia Richmond, on top of their $495 DOC fee and $395 Go Green charge. This was the APA’s first encounter with a “brokerage fee” in a retail sale. Kia Vancouver’s Additional Dealer Markup was the single highest extra charge of the investigation. Cost to the dealer: $0

End of lease inspection $299, End of lease charge $300
One dealer imposed both these charges for a mechanical inspection, or paperwork, whether you turn in the vehicle or decide to buy it at the end of the lease. The charges are a disguised cost of borrowing and should be included as part of the monthly payment or lease end value, rather than lurking in obscure clauses near the end of the lease contract. Benefit to the dealer: Unknown, as part of the charge may be going to the manufacturer.

Knowledgeable seller. The business office jacked up the advertised $71 a week payment before tax to $174 bi-weekly, a difference of over $3,000 over the life of the loan. After the visit, the manager told W5 they increased the interest rate from the promised prime rate without informing the shopper. Misrepresentation on the corrosion warranty.

Dealer has the advertised base Cherokee. High extra charges, but they were indicated in the dealer’s online ad. Dealer correctly indicates the air tax isn’t going to anyone; it’s a “recovery.”

FORD

DEALER

RATING

VEHICLE

COMMENTS

Key West Ford

301 Stewardson Way
New Westminster, BC
V3M 2A5
Tel: (604) 239-7832

FAIL

2017 Focus SE

EXTRA CHARGES
$599 documentation (in ad, tiny)

CORROSION WARRANTY
“I don’t know if Ford has one.”

Dealer has the ad car in several colours. Deceptive ad promises no-payments for the first three months and a $1,000 Costco discount. Neither is available on the Focus.

GENERAL MOTORS

DEALER

RATING

VEHICLE

COMMENTS

Dueck GM

888 Terminal Ave.
Vancouver, BC
V6A 2M5
Tel: (604) 675-7900

PASS

2018 Chevrolet Equinox LS

EXTRA CHARGES
$549 Documentation (in ad, on top of price but included in the ad payment)

CORROSION WARRANTYYes

Seller promotes the more equipped LT, but dealer has the advertised LS. Weekly $68 ad payment includes the Documentation charge (nice touch). Recommends rustproofinig because it protects the vehicle should a nail go through the axle on the road (exaggeration).

Advertised Soul not at the location; it turns out two dealers are sharing one vehicle, but their ads don’t say that. Phony advertised discount of $5,500 is based on a retail price more than $2000 above MSRP. Exaggerated extra charges.

Kia West

396 SW. Marine Drive
Vancouver BC
V5X 2R6
Tel: 604-326-6868

FAIL

2018 Forte manual
(dealer ad)

“Up to $10,000 cash back”

EXTRA CHARGES
$499 documentation (in ad)

CORROSION WARRANTY
Yes

The dealer has the advertised base Forte LX in inventory. “Cash back” is not a discount; the price of the car will be boosted by the amount of the cash returned to customers, who will end up paying tax on this loan to themselves.

West Coast Kia

19950 Lougheed Highway
Pitt Meadows BC
V3Y 2S9
Tel: 604-460-9111

PASS

2018 Forte manual

EXTRA CHARGES
$495 DOC (in ad, tiny)

CORROSION WARRANTY
“8 years” (actually 5 yrs)

Personable seller says, “This ad is not written very well” (correct, it’s confusing). He found the ad vehicle after having some trouble locating it.

NISSAN

DEALER

RATING

VEHICLE

COMMENTS

Applewood Nissan

Richmond Auto Mall
Richmond, BC
V6V 1W8
604-273-1661

FAIL

2018 Rogue S 2WD

EXTRA CHARGES
$0
All-in price

CORROSION WARRANTY
No

The seller says, “No rust warranty, nobody has a rust warranty.”

Morrey Nissan

4450 Still Creek Drive
Burnaby, BC
V5C 6C6
Tel: (604) 291-7261

FAIL

2018 Rogue S 2WD

EXTRA CHARGES
None for the advertised offer.

CORROSION WARRANTY
Yes

Ad promises a heated steering wheel and remote starter among the list of “standard” features. Neither is available on a Rogue S as a standard or optional feature.

TOYOTA

DEALER

RATING

VEHICLE

COMMENTS

Destination Toyota

4451 Still Creek Dr.,
Burnaby, BC
V5C 6G9
Tel: 604-571-4350

FAIL

2018 Corolla CE manual (Toyota ad)

2018 Corolla CE automatic (dealer ad)

EXTRA CHARGES
$0
All-in ad price

CORROSION WARRANTY
No, Toyota doesn't have a rust warranty.

There is no base Corolla CE for $16,790 as advertised on the Toyota Canada website. Ad reads all-in price, but seller says there’s a $498 extra DOC charge.

There is no manual transmission CE like in Toyota’s ad. The better-equipped automatic costs $4,000 more. Mandatory end-of-lease charges are a new money grab.

VOLKSWAGEN

DEALER

RATING

VEHICLE

COMMENTS

Clarkdale Volkswagen

4575 Main St.,
Vancouver BC
V5V 3R4
Tel: 604-872-5431

FAIL

2018 base Golf 3-door
(VW Canada ad)

Earn Up To $10,000 cash back! (dealer ad)

EXTRA CHARGES (TOTAL: $1,077 not in ad)$697 DOC
$380 vehicle preparation (appears to be double billing, part of freight and PDI)

CORROSION WARRANTY
Yes

Base Golf advertised by VW is not available. Seller says the advertised "Welcome to 2018 - Up To $10,000 cash back!” offer is not available on any 2018 models. Preparation charged twice; it’s already included in the Freight and PDI charge.

Regency Volkswagen

2555 Barnett Highway
Coquitlam BC
V3H 1W4
Tel: 604-461-5000

FAIL

2018 base Golf 3-door manual (dealer ad)

10 years/200,000 km mechanical breakdown protection

EXTRA CHARGES
$1,093 combined Finance and DOC charge (not in ad)

CORROSION WARRANTY
Not free

Dealer has a base 3-door Golf with a manual transmission like the one in the ad. Exaggerated extra charges. Misrepresentation on the corrosion warranty; VW offers 7 years no charge.